Statistics reveal a difference of 7 percent between the
remuneration paid to men and that paid to women with the same
qualifications in Germany. The average hourly wage even shows a
difference of 22 percent, making pay discrepancy in Germany one of
the highest in the EU. In order to adjust these wage injustices,
the German Federal Ministry for Family Affairs, Senior Citizens,
Women and Youth submitted a first preliminary ministerial draft of
the German Equal Pay Act (Entgeltgleichheitsgesetz) on
December 9, 2015. The act is expected to be adopted in 2016.
New Information Rights for Employees and Works
The draft mainly provides for transparency within the company.
Both, employees and the works council will be entitled to be
informed by the employer about the salary of co-workers in similar
positions. Specifically, the information right covers the average
remuneration of a group of at least five employees performing the
same or the same type of work. It includes information about a
certain pay group and about work that is performed mainly (i.e., 60
percent and more) by the other gender. Furthermore, the employee
may obtain information about the criteria and the procedure for
determining his or her own salary.
Accordingly, confidentiality clauses in employment contracts
covering the salary are invalid. However, with a view to data and
privacy protection, the employer may not disclose any information
about the specific remuneration of individual employees.
Consequently, the data on the basis of which the average
remuneration is calculated must be rendered anonymous.
Legal Enforcement of Equal Pay
The employer must respond to an inquiry in text form within one
month. If he does not meet the employee's request or does not
answer it properly, the employee may enforce the claim by filing a
lawsuit. Alternatively, the employee may file a complaint with the
works council first which will influence the employer to rectify
the situation if it considers the complaint justified.
In case of unequal pay without objective justification, the
employee is entitled to supplementary payments for the last three
Rights of the Works Council
Besides the above-mentioned information rights, works councils
obtain further co-determination rights. They are also supposed to
support the employer in questions of equality and wage-setting and
control the establishment of an equal wage structure.
The works council may force the employer to conduct a company
review procedure if several cases of discrimination indicate that
the wage structure is generally discriminatory with respect to
Changes for Employers
The Equal Pay Act will bring many changes for employers. For
example, they will have to comply with numerous information
Furthermore, in a job advertisement employers must indicate the
minimum wage for the advertised position as provided for under
applicable collective bargaining agreements or by law or other
norms of collective legislation.
There are additional requirements for large companies with more
than 500 employees. These companies have to introduce an internal
company procedure by way of which pay equity is to be reviewed.
This procedure has to be certified by the Federal
Companies within the scope do not only have to publish the
results of their company procedures, but will also be required to
report about the implementation of the procedures and their own
compliance with the principle of equal pay. If the report reveals
gender discrimination with regard to pay, the relevant remuneration
arrangements must be eliminated without delay.
Practical Impact for Businesses in a Nutshell
Potential subsequent wage payments will impose an additional
financial burden on companies. Furthermore, considerable internal
capabilities will be needed to meet obligations to provide
information and – in case a works council exists – to
exercise the new co-determination rights. Especially for large
companies with more than 500 employees, the procedural rules that
are to comply with will tie up internal operating resources.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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